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Apple grabs nearly 50 percent of handset industry profits

Sam Abuelsamid

For the better part of a decade, Apple has consistently shown that having a comparatively small market share by volume is no impediment to making money, and lots of it. Despite the company's PC share hovering in single digits through most of the 2000s, Apple has been far and away the most profitable computer hardware maker for many years (and generally coming second only to software-centric Microsoft in generating cash). Now that inverse relationship between share and profits continues into the mobile space.

Analysis firm Canaccord Genuity estimates that Apple accounts for only 3.9 percent of total global volume sales of mobile handsets. However, the iPhones sold in the third quarter of 2010 accounted for approximately 47 percent of all profits in the industry. While the vast majority of handsets sold around the world still fall into the feature phone segment, smartphones are where the money is.

Smartphone specialists Apple, HTC, and RIM grabbed 71 percent of the net profits. Even Motorola -- which has had a long string of money-losing quarters -- has finally returned to the black thanks to its emphasis on Android-based smartphones. Nokia may be outselling everyone else by a wide gap, but they certainly don't seem to be making it up on volume.

Even with Android as a whole gaining market share, the proliferation of different phones will limit economies of scale for manufacturers -- so Apple looks likely to continue its cellphone profitability for some time to come.

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